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04/28/87 Economy Fire & Casualty v. Gab Business Services

April 28, 1987

ECONOMY FIRE & CASUALTY COMPANY, PLAINTIFF-APPELLANT

v.

GAB BUSINESS SERVICES, INC., DEFENDANT-APPELLEE



APPELLATE COURT OF ILLINOIS, THIRD DISTRICT

507 N.E.2d 896, 155 Ill. App. 3d 197, 107 Ill. Dec. 743 1987.IL.552

Appeal from the Circuit Court of Bureau County; the Hon. C. Howard Wampler, Judge, presiding.

APPELLATE Judges:

JUSTICE WOMBACHER delivered the opinion of the court. SCOTT, P.J., and STOUDER, J., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE WOMBACHER

The plaintiff, Economy Fire and Casualty Company (Economy), brought an action against defendant, GAB Business Services, Inc. , alleging breach of an oral contract and common law negligence. Plaintiff sought to recover damages alleged to have been caused by defendant's conduct in adjusting an insurance claim on their behalf. The defendant filed a motion to dismiss pursuant to section 2-619(a)(9) of the Code of Civil Procedure (Ill. Rev. Stat. 1983, ch. 110, par. 2-619(a)(9)) which incorporated by reference the record from a different trial. The trial court granted defendant's motion and plaintiff appeals.

Three issues are raised in this appeal: (1) whether plaintiff as a matter of law sustained damages as a result of the conduct of the defendant; (2) whether the trial court erred in granting defendant's section 2 -- 619(a)(9) motion to dismiss; and (3) whether the trial court committed reversible error by granting GAB's section 2 -- 619(a)(9) motion because it was really a "hybrid motion" which prejudiced the plaintiff.

On June 11, 1980, Joseph Helland and Sherman Buckley were involved in an automobile accident. In July of 1980, GAB was employed by Economy to adjust Helland's insurance claim against Sherman Buckley, Economy's insured. Joseph Helland's insurance claim involved claims for both personal injuries and property damage. With Economy's approval and knowledge, Helland's property damage claim was settled by Jim Martinkus of GAB in October of 1980.

GAB made several offers to Helland in attempt to settle Helland's personal injury claim, but Helland rejected these. At trial in a previous action against Sherman Buckley, Helland testified that he had an agreement with Jim Martinkus that he could settle his personal injury claim after his medical treatment was complete. Although GAB reported to Economy on a regular basis, Economy denied having any knowledge of this agreement between Helland and GAB.

On October 28, 1981, Economy sent a letter to GAB instructing them to make no further contact with Helland, but instead to let Helland come to GAB. At this time Economy also instructed GAB to close and deactivate the Helland file. In late September or early October of 1982, after the statute of limitations had run, Helland learned that his file was closed and that GAB no longer wished to negotiate. Helland then retained counsel and filed suit on October 18, 1982. In that case, a jury found that the defendant, Sherman Buckley, was estopped from raising the statute of limitations as a defense to Helland's personal injury claim. As a result of that verdict, Economy filed a two-count complaint against GAB which is the subject of the case at bar.

The first issue in this appeal is whether Economy suffered damages as a result of the conduct of GAB. Economy argues that it suffered damages because the conduct engaged in by GAB resulted in a waiver of the statute of limitations defense. Economy contends that they had no knowledge of any agreement between GAB and Helland that Helland's personal injury claim could be settled after his medical treatment was complete. Economy claims that had the statute of limitations defense been successful, their exposure for Helland's claim would have been zero. Instead, after they were estopped from raising that defense they settled Helland's claim for $9,250. Economy seeks to recover the $9,250 paid to Helland along with the attorney fees and costs incurred in the Helland case as damages.

GAB argues that the October 28, 1981, letter from Economy to Jim Martinkus of GAB, instructing GAB to close its file on Helland and to have no further contact with him, constituted a change of position on the part of Economy which superseded any conduct on the part of GAB. GAB contends that it then became Economy's duty to notify Helland of its change of position toward settlement and the date the statute of limitations was to run. GAB argues that Economy's failure to do so resulted in the application of the doctrine of equitable estoppel.

In order for equitable estoppel to apply, the conduct of the party against whom it is asserted must be such as "to cause the other party to change his position by lulling him into a false security, thereby causing him to delay or waive the assertion of his rights to his damage." (Dickirson v. Pacific Mutual Life Insurance Co. (1925), 319 Ill. 311, 318, 150 N.E. 256, 259.) In Illinois, factors to consider in determining whether a party's conduct is such as to cause a reasonable belief in the plaintiff that a claim will be paid are: (1) concession of liability by the insurer; (2) conduct or statements by the insurer encouraging delay; (3) payments by the insurer during the negotiating period; and (4) plaintiff's awareness of the statute of limitations and whether plaintiff has retained counsel. Zaayer v. Axel (1981), 102 Ill. App. 3d 208, 429 N.E.2d 607.

In Zaayer, the defendant's insurance agent had made settlement offers, paid sums in settlement of damages, and generally encouraged an amicable settlement of the claim. The settlement negotiations continued up until six months prior to the expiration of the statute of limitations. The court in Zaayer held that defendant could not use the statute of limitations to escape liability, absent an affirmative showing that the settlement ...


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